The Marketing Funnel Guide: How to Qualify Leads and Turn Them Into Customers

Matthew Guay / April 24, 2018

“We are the hero of our own story.”- Mary McCarthy

In a world where Apple sells nearly seven iPhones each second, it’s hard to imagine the two Steves (Apple co-founders Steve Jobs and Steve Wozniak) needing leads. But in 1976 as they presented their first Apple computer to the Homebrew Computer Club, they desperately needed people interested in their products. And Paul Terrell, the founder of the early computer store Byte Shop, just as desperately needed a computer to sell. Jobs' pitch interested Terrell enough to hand Jobs his business card—and Jobs was eager enough to close the sale that he followed up the next day, selling Apple's first batch of computers.

History remembers Jobs, his sales acumen, and how those first computers—sold at Byte Shop for $666 each—made Apple’s later successes possible. But the story is Terrell’s (who turned his store into an international franchise of 58 stores before selling it). He was the lead in need of a product that Jobs and Woz could fulfill. He had a story, and Apple filled the missing part.

To build your Apple, you need a Terrell. Or to build and sell anything, you need a marketing lead, someone interested in your product or service who could be your next customer.

What Is a Lead?

For businesses, a lead is someone interested in your product or service. Someone walks through your store, subscribes to your email newsletter, calls your sales team, sends an email asking about features—they're all leads. They’re people who might turn into customers.

Lead: Someone interested in your product or service.

Random people on the street aren’t leads. They could become leads in the future—for now, though, they don’t know about your product. Leads, on the other hand, took action. They walked in, signed up, picked up the phone, asked.

Your leads are leads in their own story, and they need your product to complete that story. They’re Terrells needing new computers. Whether through marketing or word-of-mouth or happenstance, they think your product might fill their need. Now they’re your lead.

Your job is to fill that need and turn this lead into a new customer. To do that, you move this potential customer from awareness to sale, through the marketing funnel.

What Is the Marketing Funnel?

It doesn’t all happen at once. Of the around 4 billion people alive in 1976, perhaps a few dozen heard about Apple’s first computer when Steve Jobs pitched it to the Homebrew Computer Club. Of those, one took action—and that same one turned into a customer.

Perhaps everyone on earth could potentially be your customer. But they won’t be. Instead, you’ll start by telling the widest possible group of people about your product, then keep working on the people who seemed interested until finally some of them turn into customers. That’s what’s often called a marketing funnel.

The idea is, you start out with a lot of people who are somewhat interested. Say 100 people watched your demo in a store. That’s where your funnel starts. Now, 80 of those people fill out a survey and take home a flyer. They’re leads—interested in your product enough to want more info. You then email each of those leads, share more info, and ask if they have any questions or would like a coupon for a discount. 40 of those leads reply. They’re now prospects or qualified leads—someone likely to become a customer since they’ve taken action and showed that they’re still thinking about buying your product. And at the end of the funnel, perhaps 20 of the qualified leads take you up on your offer, purchase your item, and become a customer.

ProspectorQualified Lead: A lead who's highly likely to become a customer.

Here’s how it works in real life.

The Journey from Lead to Customer

Take Bob. He’s a homeowner tired of cutting the grass—something your new self-driving lawn mower solves. Perhaps Bob’s only slightly frustrated with lawn mowing, so he thinks about it every week or two when he’s cutting the lawn. How do you turn him into a lead—and then a customer?

These are the standard stages people go through before they buy your product—the terms you’ll see in customer relationship marketing (CRM) apps and marketing books:

Marketing

It all starts with interest, the top of the funnel. People need to know about your products and be at least curious about purchasing them. You’ve made something great—now you have to tell people about it.

What you need is marketing: “the action of promoting and selling products”. Marketing may eventually get you sales, but first, it will get you leads.

Perhaps you could share your lawn mower at local gardening clubs or open booths at gardening events. Or you could do more. You could print flyers. Wave a sign on the street. Rent a billboard. Run a commercial. Advertise on Facebook targeting people most likely to be interested in your product. Write blog posts and make videos that people looking for a product like yours will discover. Shoot your lawn mower into space and get the world to watch as Elon Musk did with a Tesla.

Every advertisement, every sponsorship, and most business use of social media, email, and online content are marketing to a degree. They’re how you let people know about your products and company.

Lead Generation

With any luck, your ads paid off. People saw your lawn mower somewhere, somehow, and now they’re interested. So they open your website or walk into your store. They’re ready to be leads.

Now you need to capture the lead—or in other words, you need to get their name and contact info so you can stay in touch and convince them to make the purchase. Perhaps you talk with them and write their info down on a form. Maybe you have a website they can fill out to get more information. They might take your lawn mower on a demo run. Either way, they’re now a lead—someone interested in your product.

Lead Nurturing

Bob saw your commercial, tried a demo of your self-driving lawn mower at a local store, and filled out a contact form on your site to get a special discount. But remember: Bob’s only occasionally interested in lawn mowers. Most of the week, he’s busy with his job and focused on his family and friends and hobbies. Lawn mowing pops into his mind once Saturday comes and he has to fire up the old lawn mower again.

Here’s your chance. You can nurture the lead or make that person more likely to actually purchase your product. Share extra info about your product, remind the lead about how the product can help them and why they want it, and nudge them a bit closer towards making the purchase.

This is the part of the process most often automated with what’s called marketing automation. We’ll dive into this a lot deeper later, but for now, here are the basics. When you first start your business, you have time to showcase your product personally, shake hands, and follow up on each lead. Over time, you’ll get busy and want the tech to take care of itself. So, you’ll connect your website’s form to your email app and let it stay in touch with new leads automatically.

Drip emails—or automated emails sent on a schedule—are one of the most popular ways to do this. You could send Bob an email with a discount coupon when he first fills out your form and thank him for his interest. SMS and social media message work well, too. A couple days later, you could send him a text details about your lawn mower. And right before the weekend, perhaps you could share a local deal or a story about how much time your lawn mower saves other homeowners directly on Facebook. Or you could replace email with paper mail, a phone call, or even retargeted ads that remind him about your brand.

You’ll keep your product in the lead’s mind and increasingly pique their interest.

Lead Qualification, Opportunities, and Prospects

Some leads don’t work out. They’re somewhat interested, just not enough to actually purchase your product. A competitor might catch their eye, or they might decide mowing the lawn with the old lawnmower isn’t so bad after all.

Other leads get more interested, more committed, a few steps closer to making the purchase. They might come into your store again, or send you an email about pricing. Maybe they click a link from your email, watch a video, or download a white paper—something, anything, that means they’re more likely to make the purchase. They're leads that take action, as in the funnel above.

That’s lead qualification, when someone goes from a lead to what many CRMs call an opportunity, prospect, or qualified lead. They’re people you really think will buy your product, and you’ve just got to close the sale.

There are multiple types of qualified leads, too:

Product Qualified Lead: Are you sure this person is right for your product? Maybe they don't have a lawn, and thus don't need a lawn mower. Maybe their lawn is too large for your current lawn mower models. As you interact with the lead, you'll start to see whether or not they're actually someone who really needs your product—and thus, whether they're a product qualified lead. If not, you can stop marketing and focus on others who do need your product.

Marketing Qualified Lead: If they are product qualified, then they might need more convincing before they make the purchase. Time to work more on lead nurturing with these leads who are marketing qualified—or who need more marketing first.

Sales Qualified Lead: Or, maybe you're sure they want to make the purchase, even if they haven't received all your marketing materials yet. That'd make them sales qualified—or people who are ready for your sales team to close the deal.

That's why you'll see so many types of funnels referenced, with marketing funnels focused on sharing more information and getting increasingly qualified leads, and sales funnels spanning everything from the first interaction to the final sell.

Either way, once someone's qualified, you could make a note on your own, tagging Bob as interested once he emails you twice. Or your CRM could do this on its own (again, marketing automation at work), noting every time he clicks on an email and marking him as a prospect once he clicks on two emails’ links. And then you'll do more lead nurturing, keeping in touch with this now qualified lead with more info that will help them decide to take that final leap and buy.

Customer

Bob’s convinced. Whether it was that initial ad, the demo run at the store, or your friendly email that sealed the deal, you may never know. Could be a combination of them all. Either way, this fine Saturday, Bob decided he really does need a self-driving lawn mower and buys yours.

You did it—you got a new lead and turned them into a customer. That's the conversion, when a lead gets converted into a customer and exits the funnel.

Customer Retention and Churn Reduction

Time to do that all over again. Bob's a customer—and he could be your customer again, too. Buying your self-driving lawn mower made him the perfect lead for an extended warranty, new lawn mower tires and batteries, and any other products you sell that go along with the lawn mower. Perhaps you offer a yearly maintenance service—something Bob paid for this year, but might not pay for the next without prompting.

That’s where customer retention comes in. You want to keep your customers around. They should be the easiest people to sell to again. And with services especially, you don’t make all the money up front and instead need them to keep using your service over time, just as Netflix and Spotify want to keep you using their services each month so you don’t cancel. That’s churn reduction, essentially customer retention aimed at keeping people from dropping their subscription, or churning.

In many ways, a funnel once again is the wrong metaphor. Perhaps a loop would be better, where you create awareness, get someone interested enough to take action, then convert them into a customer—and start all over again.

There are also up-sells and cross-sells. Bob has your lawn mower, but he hasn’t bought a mower accessory yet—here’s a chance to up-sell, or get him to buy something else (or a better model) at the same time. And, he still doesn’t own your automated car cleaner bot. He’s not a lead for that yet—he might not even know about it. You can now try to cross-sell or get him to purchase your other products, too, following the same general blueprint.

And if you do it well, you’ll help Bob see how each of your products fits his life story, solves a problem that’s been bugging him forever, or does something he didn’t even know could be done.

It’d be great if customers magically came from nowhere—and hey, sometimes they do. Sometimes you’re in the right place at the right time, someone decides at random to take the risk on your product, and you gain a new customer with little work.

Most of the time, though, sales takes work, as every good thing does. You could lead someone new through everything your company has to offer—or you could add them as a lead in your CRM, and market to them automatically. Either way, the lead part matters. Keep the user’s own needs first in mind, make sure your product really does help this start of their own story out, and you’ll be that much more likely to make a sale—and a lasting connection.